The U.S. has spent the last 70 years making massive investments in basic and applied research. Government funding of research started in World War II driven by the needs of the military for weapon systems to defeat Germany and Japan. Post WWII the responsibility for investing in research split between agencies focused on weapons development and space exploration (being completely customer-driven) and other agencies charted to fund basic and applied research in science and medicine (being driven by peer-review.)

The irony is that while the U.S. government has had a robust national science and technology policy, it lacks a national industrial policy; leaving that to private capital. This approach was successful when U.S. industry was aligned with manufacturing in the U.S., but became much less so in the last decade when the bottom-line drove industries offshore.

In lieu of the U.S. government’s role in setting investment policy, venture capital has set the direction for what new industries attract capital.

This series of blog posts is my attempt to understand how science and technology policy in the U.S. began, where the money goes and how it has affected innovation and entrepreneurship. In future posts I’ll offer some observations how we might rethink U.S. Science and National Industrial Policy as we face the realities of China and global competition.

Office of Scientific Research and Development – Scientists Against Time
As World War II approached, Vannevar Bush, the ex-dean of engineering at MIT, single-handledly reengineered the U.S. governments approach to science and warfare. Bush predicted that World War II would be the first war won or lost on the basis of advanced technology. In a major break from the past, Bush believed that scientists from academia could develop weapons faster and better if scientists were kept out of the military and instead worked in civilian-run weapons labs. There they would be tasked to develop military weapons systems and solve military problems to defeat Germany and Japan. (The weapons were then manufactured in volume by U.S. corporations.)

OSRD divided the wartime work into 19 “divisions”, 5 “committees,” and 2 “panels,” each solving a unique part of the military war effort. These efforts spanned an enormous range of tasks – the development of advanced electronics; radar, rockets, sonar, new weapons like proximity fuse, Napalm, the Bazooka and new drugs such as penicillin and cures for malaria.

The civilian scientists who headed the lab’s divisions, committees and panels were given wide autonomy to determine how to accomplish their tasks and organize their labs. Nearly 10,000 scientists and engineers received draft deferments to work in these labs.

One OSRD project – the Manhattan Project which led to the development of the atomic bomb – was so secret and important that it was spun off as a separate program. The University of California managed research and development of the bomb design lab at Los Alamos while the US Army managed the Los Alamos facilities and the overall administration of the project. The material to make the bombs – Plutonium and Uranium 235 – were made by civilian contractors at Hanford Washington and Oak Ridge Tennessee.

OSRD was essentially a wartime U.S. Department of Research and Development. Its director, Vannever Bush became in all but name the first presidential science advisor. Think of the OSRD as a combination of all of today’s U.S. national research organizations – the National Science Foundation (NSF), National Institute of Health (NIH), Centers for Disease Control (CDC), Department of Energy (DOE) and a good part of the Department of Defense (DOD) research organizations – all rolled into one uber wartime research organization.

OSRD’s impact on the war effort and the policy for technology was evident by the advanced weapons its labs developed, but its unintended consequence was the impact on American research universities and the U.S. economy that’s still being felt today.

National Funding of University Research
Universities were started with a mission to preserve and disseminate knowledge. By the late 19th century, U.S. universities added scientific and engineering research to their mission. However, prior to World War II corporations not universities did most of the research and development in the United States. Private companies spent 68% of U.S. R&D dollars while the U.S. Government spent 20% and universities and colleges accounted just for 9%, with most of this coming via endowments or foundations.

Before World War II, the U.S. government provided almost no funding for research inside universities. But with the war, almost overnight, government funding for U.S. universities skyrocketed. From 1941-1945, the OSRD spent $450 million dollars (equivalent to $5.5 billion today) on university research. MIT received $117 million ($1.4 billion in today’s dollars), Caltech $83 million (~$1 billion), Harvard and Columbia ~$30 million ($370 million.) Stanford was near the bottom of the list receiving $500,000 (~$6 million). While this was an enormous sum of money for universities, it’s worth putting in perspective that ~$2 billion was spent on the Manhattan project (equivalent to ~$25 billion today.)

World War II and OSRD funding permanently changed American research universities. By the time the war was over, almost 75% of government research and development dollars would be spent inside Universities. This tidal wave of research funds provided by the war would:

Establish a permanent role for U.S. government funding of university research, both basic and applied

Establish the U.S. government – not industry, foundations or internal funds – as the primary source of University research dollars

Establish a role for government funding for military weapons research inside of U.S. universities (See the blog posts on the Secret History of Silicon Valley here, and for a story about one of the University weapons labs here.)

Make U.S. universities a magnet for researchers from around the world

Give the U.S. the undisputed lead in a technology and innovation driven economy – until the rise of China.

The U.S. Nationalizes Research
As the war drew to a close, university scientists wanted the money to continue to flow but also wanted to end the government’s control over the content of research. That was the aim of Vannevar Bush’s 1945 report, Science: the Endless Frontier. Bush’s wartime experience convinced him that the U.S. should have a policy for science. His proposal was to create a single federal agency – the National Research Foundation – responsible for funding basic research in all areas, from medicine to weapons systems. He proposed that civilian scientists would run this agency in an equal partnership with government. The agency would have no laboratories of its own, but would instead contract research to university scientists who would be responsible for all basic and applied science research.

But it was not to be. After five years of post-war political infighting (1945-1950), the U.S. split up the functions of the OSRD. The military hated that civilians were in charge of weapons development. In 1946 responsibility for nuclear weapons went to the new Atomic Energy Commission (AEC). In 1947, responsibility for basic weapons systems research went to the Department of Defense (DOD). Medical researchers who had already had a pre-war National Institutes of Health chafed under the OSRD that lumped their medical research with radar and electronics, and lobbied to be once again associated with the NIH. In 1947 the responsibility for all U.S. biomedical and health research went back to the National Institutes of Health (NIH). Each of these independent research organizations would support a mix of basic and applied research as well as product development.

Finally in 1950, what was left of Vannevar Bush’s original vision – government support of basic science research in U.S. universities – became the charter of the National Science Foundation (NSF). (Basic research is science performed to find general physical and natural laws and to push back the frontiers of fundamental understanding. It’s done without thought of specific applications towards processes or products in mind. Applied research is systematic study to gain knowledge or understanding with specific products in mind.)

Despite the failure of Bush’s vision of a unified national research organization, government funds for university research would accelerate during the Cold War.

Coming in Part 2 – Cold War science and Cold War universities.

Lessons Learned

Large scale federal funding for U.S. science research started with the Office of Scientific Research and Development (OSRD) in 1940

Large scale federal funding for American research universities began with OSRD in 1940

In exchange for federal science funding, universities became partners in weapons systems research and development

13 Responses

Thanks for laying this out clearly. I have just started to learn these facts and use them in my blog and to guide my companies as we try to innovate and to produce useful products. Your history makes it clearer what works, what doesn’t, and why.

I was an unofficial member of the Presidents Science Advisory Committee, beginning at the age of 10. While your history correctly reports the official story, it does not speak to the intent of individuals, who were unhappy with the limited application of their R&D efforts. As you continue to write and learn from history, consider what would have happened if those dedicated individuals had access to the internet, 1950.

Hi Leonore,
How might the rest of us find out what you know about this story? I am intensely interested and just finished reading and reviewing “Tuxedo Park”, “The Los Alamos Primer” and “The Great Decision.” I also live in Los Alamos, NM and have gleaned some pieces of the history directly from those who made it. I am a biologist and never worked in nuclear weapons. The story, however, is compelling.

What’s also important is the post war culture of how the innovation was carried out which differs vastly to the red tape and ‘correctness’ of work-life today. Innovation is about observation & action/reaction – and in today’s culture that exploration path is often kept at arms length through a tier of policy glue.

Our desire to immerse deeply with innovation is often countered by the friction in today’s many’s layered systems that push most out of that sphere of engagement – rather than the single unilateral focused need to make it so, through small groups challenged/tasked with changing their future.

Something to be said about placing one’s backside on the soap box of need and having to make it work – supported by a itsy-bitsy committee with deep pockets !

Steve,
I’d like to have your permission to translate this and the rest of the series into Russian. I believe this hold a great inspirational and educational value and would like to share this with those of my friends who better comprehend in their native language. Besides, it will make me read these with a lot more attention :)

Thank you so much for your work on Customer Development and material that you have made publicly available. I am a lecturer at the University of Trinidad and Tobago (Trinidad and Tobago ) and guide my students along the path to entrepreneurship. I don’t believe that entrepreneurship can be taught but I certainly know that the Customer Development can guide anyone to become a successful entrepreneur.

Over the past few years I have used the principles exposed by Alex Ostwerwalder, Eric Ries and yourself in my course. Now I am fully integrating your material into my course material because although I felt comfortable with the principles my greatest challenge was presenting it in way that facilitates optimal assimilation by students who are citizens of a digital world. The course EP245 – How to Build a Startup on Udacity.com hits the mark for me and allows student to have a strong visual experience that they can revisit and reinforce as and when they wish. It allows me to more pay attention to ways and means by which the students can get more out of the class. The class is now one where they learn outside the classroom based on their individual encounters with the real work.

As I learn too, I hope that one day your approach and that of others would help to raise the entrepreneurial mindset of the students that I teach and by extension that of my country.

Yesterday we covered Lecture 3 – Customer Segments which dealt with market types. A student pointed out that Black Market was missing from the market types. I was stunned. In developing countries some black markets do provide essential products and services to the population.

Thank you so much for your work on Customer Development and material that you have made publicly available. I am a lecturer at the University of Trinidad and Tobago (Trinidad and Tobago ) and guide my students along the path to entrepreneurship. I don’t believe that entrepreneurship can be taught but I certainly know that the Customer Development can guide anyone to become a successful entrepreneur.

Over the past few years I have used the principles exposed by Alex Ostwerwalder, Eric Ries and yourself in my course. Now I am fully integrating your material into my course material because although I felt comfortable with the principles my greatest challenge was presenting it in way that facilitates optimal assimilation by students who are citizens of a digital world. The course EP245 – How to Build a Startup on Udacity.com hits the mark for me and allows student to have a strong visual experience that they can revisit and reinforce as and when they wish. It allows me to more pay attention to ways and means by which the students can get more out of the class. The class is now one where they learn outside the classroom based on their individual encounters with the real work.

As I learn too, I hope that one day your approach and that of others would help to raise the entrepreneurial mindset of the students that I teach and by extension that of my country.

[…] the Cold War with the Soviet Union. During World War II, the U.S. mobilized scientists in a way no other country had. For 45 years – post World War II until the fall of the Soviet Union – the U.S. viewed science […]

I enjoyed this post very much. I also enjoyed your detailed account of the story of Rocket Science. I am looking forward to part 2 of this entry (and more). I also would love to read Steve’s thoughts (as an entrepreneur and business school lecturer) on a difficult question: defining some form of ROI, maybe as a hypothetical “Romer multiplier”, for US research spending, that might represent average economic turnover (or wealth creation) from the outputs of research as those outputs propagate through the US economy (and later the world economy) in various products. Clearly, this is secondary to the inestimable value of the role of research in saving Democracy from a fascist conquest, but that message seems to get lost occasionally during economic downturns, and the question of the value of academic research (usually couched as ROI on investments of tax dollars) is perennially in the mind of state legislators. We occasionally reference Vannevar Bush’s tract in trying to answer these queries, but as time passes people do not remember (or give much thought to) the time before there was an NSF, or even a time before radar, jet-engines, rockets, nuclear weapons and power, analog and digital computers, and all the rest.